Digital Transformation in the Professional Services Sector

Professional services organizations are in high demand to help others through digital transformation efforts – how are they doing on putting these solutions into practice in their own systems?

 “The pandemic has accelerated the move toward digitization and companies’ willingness to invest accordingly,” said David Andersen, a member of Russell Reynolds Associates’ technology sector. “It has become almost an imperative for many organizations – including those within professional services – to transition to a more modernized workplace that enhances flexibility and productivity, while also optimizing for employee experience, impact to the customer, and alignment to business objectives.”

With the changing technological landscape and demand for digital transformation growing, will professional services organizations be able to stay ahead of their clients? To get a better sense of how professional services executives are thinking about this crucial topic, we recently surveyed 1,525 global board members, CEOs, C-suite executives and next generation executives, including 142 in the professional services sector.

What we learned was that while most professional services firms have been investing heavily in the past two years into areas of technological transformation, they may need to do more to maintain their edge.

Professional services executives are leaders in utilizing technology to improve the way work is done

Overall, professional services executives recognize the gravity of keeping pace with technological change, with 50% of sector leaders indicating that digital transformation is a top five business objective over the next 12 to 18 months,
compared to the global average of 46%. Furthermore, 71% of professional services executives feel that their leadership is prepared to handle digital transformation, slightly above the global average of 67%. Combined, these factors suggest that professional services organizations are well-poised to take advantage of digital innovation.

At an individual level, professional services leaders report personally using technology over the past two years to collaborate with their teams more often than their global counterparts. Specifically, they are more likely than others to use digital technology to:

• Collaborate with other teams/functions
• Redesign core processes
• Improve efficiency of the team by leveraging technology/data

Professional services firms are less likely than others to invest heavily in new technologies or processes

Despite recognizing the importance and inevitability of digital transformation and innovation, professional services organizations may not be adequately building for the future. When asked about the extent to which they are currently investing in new technology offerings, professional services firms were slightly less likely than others to be spending heavily. This covers essential avenues for innovation, such as building new digital business models, products, or offerings and using digital technologies to launch new operational processes and ways of working.

Looking ahead

While executives in professional services have invested a large amount in technological innovation over the past two years, they may not be keeping pace for future growth

Of course, developing a solid digital strategy is only one piece of the puzzle when it comes to innovation and transformation. Identifying individuals who understand and evangelize digital products and processes is an important step; tasking them with driving key digital investments is another and using the technology to improve business performance is yet another.

Success in all these areas often hinges on the top leadership team. Building a team that works effectively together and has the right skills to tackle innovation is crucial to the success of the organization.

To address these points, professional services organizations should:

• Review technology strategy regularly to ensure it is supporting business strategy

  - As an executive team, review both high level technology plans and specific technology investments to ensure they are in alignment with organizational objectives and will not be derailed by potential obstacles.

• Ensure that the right leaders are in place and empowered to support new technology areas

  - Chief technology officers and chief digital officers are key assets in the fight to stay cutting edge. Make sure these executives have the right backgrounds and competencies to deliver what is needed now for the firm, and that their roles are structured with adequate authority to lead change.

• Require additional technology expertise and understanding across the C-suite

  -  Driving innovation through technology is the job of every leader in the firm. Reinforce the importance of staying informed on this area, offering formal or informal education to equip C-level executives and their teams to support enterprise-wide change efforts and spot new opportunities in their own areas.
  - Build succession planning internally so that next generation leaders are prepared to take on areas of innovation and technological advancement in the future.

The professional services sector is known as a leader in technological innovation and change. By ensuring that they stay fresh on technological innovation and invest the right level of time and resources to staying ahead of the curve, they can maintain their competitive advantage in the market.

Author

Beth Hawley is a member of Russell Reynolds Associates’ Center for Leadership Insight. She is based in Chicago.